BTS Group Aktie

Hi, everyone, and welcome to today's conference call together with BTS Group. My name is Ida Tillas. I work here at DNB Carnegie. And today, we are pleased to welcome Jessica Skon to the studio. As always, if you have any questions, please feel free to ask them in the live chat on the right hand of your screen.

So without further ado, Jessica, please.

Thank you very much. Good morning, dear investors. I am very happy to be with you today for our Q1 report, and I am super pleased to announce that BTS is back to profitable growth and we expect that to continue.

Our revenue at the group level grew 5% in the first quarter, while EBITA grew 19%. We're very pleased that our North America turnaround is complete. BTS Europe continues to do fantastically from a growth perspective and a profit growth perspective. And BTS Other markets had a rough start to the year, and we expect them to recover during the second half.

So if we double-click into the 2 or the 3 different markets. And the other thing that I'll go deep on is that AI continues to be a very strong force for good for the firm, both in terms of our competitiveness and driving growth and in terms of our internal abilities to reinvent ourselves and drive productivity.

So if we look at BTS North America, back to profitable growth. Just to remind you, it was a year ago that we declared we wanted to do a turnaround in North America. We shifted out the leadership, and many different leaders took new roles. We had 3 core strategies at that time, which was to make sure that in every proposal, we were using our most advanced AI technology products and services, and we are helping our clients with their AI ambitions.

We decided to focus more on the core of BTS, which is training, leadership development, sales and activating strategy and change, and, of course, focus all of our time and attention with our clients, helping them to reinvent themselves and stronger commercial activity. And these worked. In the first quarter, we are back to growth with 8% growth in revenue and a 50% improvement in our profitability.

BTS Europe continues to have very strong growth. That's due to the high win rates over the last year, those projects continuing to move and a bunch of small projects that we won in the fourth quarter. They had 17% revenue growth, all of which was organic. And we're seeing significant growth in 2 of our large markets with a lot of growth potential, which is France and Germany.

BTS Other markets, we expect them to have a recovery later this year, and their profit dropped in the first quarter, which was primarily due to Southeast Asian operations, in particular, our team in Thailand, Japan and Korea. We have, of course, many actions underway that we've been addressing for the last few months.

We have -- given that this market went down in revenues, we are moving resources around most of the world market. And so the countries that are having strong growth can continue to drive growth and use those resources. We have a much stronger revenue growth plan.

We have strength in leadership. We've moved some -- a very strong partner for one market over to Southeast Asia. They're more dividing and conquering. We have a more industry-focused kind of client-backed approach in terms of our go-to-market activities and so forth.

One bright spot in Other markets. Despite the war, our Middle East team is having very healthy double-digit growth in the first quarter, and we expect that to continue in the second quarter.

And our summary on AI for the moment is actually we are in the sweet spot, right now, both for helping our clients in terms of evolving their companies to take advantage of the AI movement, AI era, but also in terms of our ability to invent internally at BTS, making our products more competitive and driving absolute breakthrough efficiencies and productivity gains for the firm.

If we look at the statistics behind this, our core AI booking revenue, meaning helping our clients with their AI evolution, grew 35% in the first quarter. The AI product bookings went up 3x from a year ago.

I believe, we've been studying this and we help our clients do this, that BTS is in the top 5% of global companies right now because not only have we achieved clear ROI from AI, but we've done it 3x, and we can see more coming in the future. And we can take all of those applied AI learnings around how we've disrupted our own products and services, our own workflows and help our clients able to do the same thing.

More and more, week by week, day by day, through our own experiences, this could not be more different from digital transformation of the past. This is a people, a leadership and a culture issue. This is not a technology issue.

Internally, we've talked about this all of last year. The productivity gains from our own AI workflow reinvention in last year in 2025 is equaling SEK 74 million in annual savings this year in 2026. And all of this is great, and it's very exciting. And maybe equally important and exciting to stress is that the core of BTS demand remains very strong.

BTS has never been a traditional consulting firm, right? And our core is about building breakthrough experiences and simulations in offsite. So top 500 meetings, top 50 meetings, CEO, C-suite meetings. We pull people out and they simulate the thing they're trying to get done or the future of their firm. And clients are choosing to spend a lot more money and time bringing their people together, which I think is the counterbalance to the AI and the technology.

And then we're also good at scaling adoption and change. And right now, we have clients saying, 25,000 people just got Claude. Can you help us with the activation, the adoption and then the shifts that are going to come from that? So that's working at scale to support adoption and change.

And as I mentioned last time, the team is doing a really nice job of attracting some of the best AI companies as our clients. I'm very, very proud of that. So that's the quarter.

If we take a step back and just remind ourselves like why is BTS a great investment. We are back to sustained profitable growth. AI is creating more opportunities for growth for the firm and improve productivity internally, while our core remains in strong demand. And our growth has been and will continue to be capital light.

If we just click on all 3 of these for a minute. The first one, back to sustained profitable growth. We have an amazing global client list. We operate in 24 countries. We have been very innovative in how companies learn, change and perform for 40 years, and it is particularly important right now with a very unique value proposition.

We still only have 1%, maybe max 2% of the global market share in our space, and we are way ahead of the competition in terms of our simulation capabilities and how we're using AI. And I would say sustained growth is in our DNA. It's what the company knows. It's what we're proud of. It's how we know to operate and grow talent.

We've had 13% revenue CAGR from the time we went public to 2022. The years from 2022 to 2025 was held back simply for one reason. It was 1 unit out of 3 and the mistakes that we made in that unit that was dragging us down. 2026 forward, our biggest unit, North America, is back to growth at 8% revenue and 50% profit improvement. And we expect that growth to continue this year and into 2027.

The second one, I've already made these comments, So I can skip over it. And the third one, our growth is capital light, right? So if you think about the history of the firm, we've grown 12x since our IPO. Roughly 2/3 of that has been organic. We've paid for a great number of acquisitions during this process. Despite that, we also give about 50% on average of our profit through dividends.

We've asked for no capital, no new capital from our shareholders. We have a very strong net cash position and our cash conversion is 97% over the last 12 months. So the outlook for the year remains unchanged, and I will remind you that we never change our outlook after the first quarter.

So thank you very much, and happy to answer your questions.

Perfect. Thank you, Jessica. So starting off with a question from Johan Sunden at DNB Carnegie. When do you expect licensing revenue in North America to show year-over-year growth again? You delivered quarter-over-quarter growth in Q1.

Great question. This year would be my guess, my best feeling on that. Yes, we continue to get a lot of demand for our simulations, which licensing is a part of. We're working at scale more and more and at speed because of the breakthroughs and how we -- our ability to build our simulations. So sometime this year.

Sometime this year.

Yes.

And are you finished with the cost cuts take in North America? Or are there more to come?

We're not finished.

Not finished. More to come.

Yes, there's so much innovation happening, right? And with AI, there's a lot of small innovations that are going on and then something big happens. And when something big happens, it's very disruptive and then it requires transformative look at the team that you need and the roles that you have. And for sure, there'll be more to come.

We also have a question here from the chat from [ Marcus Ramstrand ]. So the report talks about changes to U.S. tax legislation in 2025 that's affecting BTS North America. Is it possible for you to guide concerning the tax rate for BTS going forward?

I'll come back to you on that.

How has the win rates developed in Q1 in the various divisions? And how does that compare to Q3 for 2025 and Q4 '25?

So we see a pretty strong correlation in the win rates with our growth in the units that had strong growth in the first quarter, even though there's usually a delay, right? So win rates in Europe remain strong. Win rates in North America remain strong.

Win rates in our 5 core strong markets in most of the world feel good, which the issue then is goes back to Asia, as I mentioned. So I will say, though, that the pipeline is growing there. And we sense that the turnaround is likely in the second half.

Okay. And speaking of Other markets and Asia, how serious is the issues that you witnessed in Q1? And is there a risk that the turnaround in H2 does not materialize?

I mean, there's always a risk. Historically, at BTS, most of our bigger unit turnarounds take about 3 quarters, right? That said, given everything we can see right now in terms of deals won and proposals and the movement, we feel like they've got the right energy and the right steps in place. So...

So hopefully, H2 then. Perfect. Sorry, there's so much questions. So this is Daniel Thorsson from ABG. Great. How much of the SEK 74 million annual savings in 2026 are expected to be reinvested in growth opportunities versus purely lower operating costs?

Vast majority is lower operating costs. I mean, we will continue to hire, but this is net bottom line gain.

Thank you. And also Daniel Thorsson, ABG. What sectors and countries are driving the positive start in Europe?

Yes. France and Germany, in particular. Defense sector. Strangely aerospace. It's -- we're pretty spread out, and there isn't kind of one simple big growth industry for us.

Okay. So it's kind of mix, all over.

It's mixed, yes.

Okay. So [indiscernible]. Hi, Jessica, there has been talk about the third AI savings program before. Can you tell us anything about that and how that pans out?

Yes. I mean, it has to do with another breakthrough in how we deliver one part of our portfolio, right? And similar to the last ones, that means, in general, places we might have had 7 unique roles to deliver particular products or service, that gets collapsed into 1, 2 or 3 depending on the client problem. So it's very similar from that perspective. And we're working through the implications of that right now. So...

Great.

I'll just say it will be smaller in scope than on the last big one, but it's still meaningful.

And a follow-up on the year-over-year trends in the North America licensing revenue question from Johan. You guided on Q2, Q3 in your Q4 report. Has your view changed after the Q1 report, the outlook? Or is it still the same?

For North America?

Yes, on the licensing.

On the licensing in particular?

Yes.

I think it's still the same. No change.

No change? Same?

Yes.

Let's see if I missed. Oscar Ronnkvist is asking, please elaborate on the comments about software clients being a little bit more cautious. Can you tell us some more about that?

What was it called? The SaaSmargeddon, Armageddon of the SaaS company, right? So when Claude released their latest products. Maybe the simplest way to talk about this is how we're thinking about it inside BTS because we're also a client of many of these software companies, right?

And my experience with the Claude product, in particular, is it's essentially kind of wrapped my desktop, right? So when I'm using Claude and when I'm doing my work because of the natural plug-ins to Slack and Box and Salesforce and all of that, I don't go into those files or those software holders really anymore. I'm kind of working on top of it. And so the world realized that, right?

So the big question right now is what are the traditional software companies going to do to remain at the highest level on the stack versus what's the LLM models going to do to create their plug-ins and then push them down, right? And that's going to be the fight for some time, I'm assuming years.

So that's what they're wrestling with. That's the fear, that's the reality. We'll see how it plays out. And -- but I think what's really important for BTS is that, of course, we continue to help the traditional software SaaS companies, but that the best -- some of the best, most leading AI companies right now are choosing to partner with us. And we're super proud of that, and that's where hyper growth is.

Nice. Oscar Ronnkvist is asking how has bookings year-over-year developed in North America?

Fine. Good. It's not a red flag at the moment.

Yes. Okay. Sweet. So we're down to the final question. So if you have anything else, please write it in the chat. So we will cover that before we sum up.

So final question on the guidance going forward. How confident are you in sustaining your trajectory through H2? And what are the key risks basically going forward, H2?

The main risk is the turnaround in Asia for most of the world. And currently, I will just say the 3 units feel very similar to the first quarter. So it feels like we're kind of marching with a similar narrative here in the second quarter.

Okay. So we got a few more here. Can you walk us through how your unit economies have changed in each step of your delivery from internal AI, both development programs and license? It's a big question.

Well, I think if we take that lens, what's maybe the most important thing to understand is the biggest AI innovation we've had is how we develop custom simulations for our clients, which is still the most maybe differentiated part of the firm and it's the history of the firm. That's what we're most known for.

And what the new AI-enhanced approach does is it speeds up the time from when a client wants one to when they can have it. And you can look at that from 2 lenses. What the first quarter showed us over time or over the first quarter is that we sold way more simulations than we have in the past.

I can tell you just in one unit, for example, in North America, the most we've ever done in a year was around 74. The team did 55 in the first quarter. That means that there is a lot of client requests that are saying, "Hey, I'm calling you out of the blue. In 2 weeks, could you deliver a custom simulation for this meeting?" And in the past, we would have said that's impossible.

It takes us 3 or 4 months to build it. Now, "Yes, of course, we can. We'd love to. Let's meet with your executive team and get this thing going." So it opens up fast-paced client needs that we can respond to.

Now at the same time, if you're only getting paid 2 weeks to build something that used to take you 3 months, that could be looked as a down. But with the volume and the growth, so as long as the growth is there, the margins are much higher on each project. So that's the implication on the development versus delivery versus license.

Bottom line is our clients can consume some of the coolest parts of what BTS has to offer with speed and have access to it. And for our long-time loyal clients, this is a dream for them because they've always said we wish we could do 50 of these simulations with you instead of 2, but like we can't afford it or whatever.

And so right now, it's a very net positive for us. Yes, that's the biggest change. We haven't seen a change in the pricing of the revenue with the delivery. And then on the license side, as I mentioned last year, some of our license is just content and the market -- the content market has completely changed, but it's a small percentage of the total business. So...

Thank you. Looking at your profitability and margins strengthening this quarter, would you say it's mostly OpEx related? Or are any underlying shifts in the project profitability here?

Yes. It's both. It's what I just explained in terms of the profitability to build the simulations and the AI breakthroughs there. And then it's the OpEx savings that came along with the invention of how to build our simulations, which is much smaller teams now, a lot less back and forth between the operational teams and the customer teams. That's a big change.

Combination of both.

Yes.

And what do you need to see to upgrade your FY guidance, which looks cautious given the easy comps in BTS North America?

Yes. I mean, I just want to reiterate that we don't change our guidance after the first quarter. And so we don't have to change much.

And what would you say you'd need to see in order to...

Nothing.

This is how it goes.

Yes.

Thank you. And -- so can you give us some more color on what you're actually doing when you act as a partner of choice for AI companies? Maybe you covered that a little bit already, but...

I'm super happy to do that because I think it's profound. I think it's profound for the world. right? And it has potentially a really big opportunity for BTS. So what we are doing is we are helping clients understand that they can actually trust their people and their teams to reinvent their work.

And with AI, because it's so surgical in nature, you need people to work activity by activity for the innovation to become unlocked, right? And the people who are best suited to do that are the people who do the work, okay? So we help them create the more innovative conditions, hands-on keyboard, scaled, getting the teams to start to use AI to rethink their workflows.

That's the first step. And we do that. I can tell you, we have one client that said 22,000 people are going to go on Claude. Can you help activate and adopt that? We will organize all of those scaled, hands-on keyboard sessions, role specific.

The same client said, we have 22 workflows that we want to kick off. So think marketing or inside sales or whatever the workflows are. Can you guide and work with those teams and those teams' bosses to create the conditions for low-scale innovation, but then the conditions for a really big AI breakthrough? That's half of -- and the other thing that client said is we want to rethink our strategic planning process with AI.

So the first step is how can we get some automation. They have like 9,000 data points that go into it. And when you start to go in with an automation lens with AI and a strategic planning process, what happens naturally when you're doing that, the team starts to think differently about the actual process itself. So then working with them and their leadership team on how to improve it for the next year.

So that's one client example. I think it's a very good illustrative view of what we're seeing. And this is a big shift because I would say through last year, most of our clients were still thinking either we're just getting started or everyone in the company has one AI tool, and we're not really seeing a very big return yet, right?

But I think what I just expressed is kind of the next wave. And so we help create the more innovative conditions for the teams to reinvent their own work. And then we call that flywheels. And then once a breakthrough happens, like what's happened at BTS in a few spots, we call it an AI diamond, then we help with the global adoption and change management of the new ways of working around that diamond.

And the second half is when you start to see P&L value creation. So that's it. That's how we're helping. And we're just taking what our teams needed to do both of those steps. And they feel very different.

One is more playful, more innovative, more tinkering, more creative and the other one feels like a transformation, right? But a transformation with cool new tech, that's a lot easier to adopt than, let's say, an ERP implementation in the past. So I hope that's helpful.

That's very helpful. It's a very interesting shift.

Yes, definitely. Yes.

And also on the topic of AI, given your increasing speed for each project, how much have your average invoice decreased for each project?

I actually don't have that data point. So I can come back on that. Yes.

And there was a question from Karl. And he has a follow-up question as well. Could you dig a bit deeper into the development of the license revenue? When do you expect license revenue to start increasing year-over-year again?

It's a balance between the old school license revenue and the new school license revenue, right? So on the data point that our AI products and services have gone up 3x, that is license revenue, right? It's just that's, I think, around SEK 6 million or something in bookings, which was nothing 4 quarters ago, right? And so that one is growing big.

The old school, as I mentioned, content and some standard training workshops that have been in place for a few years, that's dropping. So I don't know when the -- exactly when the turnover effect is going to happen. My best guess right now would be the end of this year, probably, but we need to go deeper in it.

Perfect. Okay. So I think that was it. There's a lot of questions in the chat, but I think we covered it all. It's been a lot of AI, North America, licenses. Do you want to have a few seconds to just wrap up the quarter?

Sure. I would just say, I think everybody feels good. We feel great that the biggest unit turnaround is complete and that we see the success of both the AI internal innovations and the competitiveness of our products and the top line growth and the bottom line, in particular, performance in North America. So we're proud about that.

And the -- we're very proud of our growing partnership with Anthropic and some deals at Google and some other cool clients there. So we're set up for hyper growth from that industry.

Yes. Europe is doing great. And the 5 biggest units in most of the world are doing very well. They're just dragged down right now by a few of the countries in Asia. So that's the story.

Perfect. Thank you so much for coming, and thank you, everyone, for listening in.

Okay. Thank you.

Thanks.

Okay. Good morning, everyone, and welcome to Q4 presentation with BTS. My name is Daniel Thorsson, analyst at ABG Sundal Collier. And with us today, we have Jessica Skon, CEO of BTS. So I'll let you present the fourth quarter. I will have a couple of questions afterwards. And for both analysts and investors joining the call, feel free to add questions in the chat, and I will ask Jessica the questions afterwards.

Perfect. Thank you. Hi, everybody. Good morning. So let me start with an executive summary. Q4 marks a turning point for us. It brings an end to our quarter-over-quarter decline in profit results for the last 3 quarters. Just to remind you, 2 out of our 3 units delivered growth in 2025, and we expect Europe and other markets to continue to deliver the revenue and profit growth during 2026. The North America turnaround, which has been all of our focus for the last 2 quarters, is progressing very well. The unit is expected to return to moderate organic revenue growth and significantly improved quarter-over-quarter EBITDA performance already in the first quarter.

We have continued to have breakthrough AI innovations during 2025, which is benefiting us in 3 significant very strategic ways. Number one, we have a much more competitive portfolio, one that we are getting daily feedback from our clients that is ahead of our competition within our space. Number two, we have implemented and pushed new services that help our clients with their own AI maturity and adoption going from initial training to workflow reinvention. And number three, which has just been absolutely profound, and we're learning from ourselves and bringing it to the market, is we continue to, I would call it, radical simplification of our internal operations. And in the fourth quarter, we even had a second wave of breakthroughs, which led to productivity gains. And we expect to reestablish earnings growth throughout 2026.

We go into more details. The fourth quarter 2025, yes, it was a continued weak revenue performance in BTS North America, which we're very disappointed by, which resulted in a poor quarter. This wasn't a surprise. It was seen for the last few quarters, but it marks an end to that trend. Almost half of the Q4 profit decline was due to noncore things. So it was due to a mix of currency headwinds and then the severance that was related to our AI-based rationalization in the fourth quarter. BTS Europe had a revenue slowdown in the fourth quarter, but that was temporary. And Q4, the year before was an exceptionally strong quarter. BTS Other Markets had solid growth, but profit decline, which was due to BTS operations in Asia and specifically in our Thailand operations, Korea and China.

If we're looking forward to the full year or if you look go backwards to the fiscal year 2025, obviously, this was a very disappointing year for us with no growth, a 25% decline in EBITDA. But it's important, I think, to remember the real story of 2025. It's a mixed picture. BTS operates in 3 units. 2 of the units, which is half of the business performed very well, very well, and you could say in a tough market, especially in Europe. So with continued growth in BTS Europe and BTS Other markets in both top line and bottom line. Half of the business did poorly. That was North America, with very weak revenue and profit performance.

We've made a lot of organizational shifts back in June and the organizational turnaround is progressing very well, both from bookings when rates are up, opportunity pipeline is growing and so forth. We are very proud of the year. It was not wasted in true BTS fashion. We are, I think, can be very proud of our internal AI innovations and our external ones, and we're bringing those learnings to the market. So if we look forward into 2026, as I mentioned, the BTS North America turnaround is progressing very well. The unit we expect will return to organic revenue growth in the first quarter with significantly improved profit already in the first quarter, which should be 1 quarter ahead of schedule.

We expect BTS Europe and other markets to continue to deliver on revenue and bottom line performance in 2026, and the AI innovation will continue to benefit us in 2026. If I double-click into the AI innovations of the year, I've made a time line for you all. Basically, we made a Wonderway acquisition in 2024, which you remember. That gave us kind of an AI technology platform that does AI conversational practice. In the first 4 quarters, basically of its existence, we have it in 115 different projects, 28,000 users, and we have clients who are now doing self-service on that platform. But in addition to that, we've launched an AI super companion coach that goes across our leadership development initiatives. On our executive communication practice, we've launched a Digital Mirror.

To support our end-to-end coaching portfolio, we have AI coaching fit for purpose, 3 different offerings for our clients. And these AI coaching offerings are not stand-alone. They're also integrated in Teams, Slack and Salesforce CRM. We have retrofitted and completely changed our simulation platforms across the business, giving our clients the ability to enjoy speed to develop, scale to deploy and for some clients who want to, they can build their own simulations. And within our CRM offering, we've also launched an agentic practice offering for our go-to-market sales clients. It was a really big year of innovation for BTS. If you add up the revenue associated with our AI services and our AI technology, it was $19.6 million in bookings last year, which will obviously carry forward into 2026.

And so now as we -- when we talk to our clients about partnering with them, we have our traditional practices, which you're used to seeing, and we've built those out with your support over the years. And now we're overlaying essentially our own AI technology offering across our practice areas. And the feedback that we're getting in the market is, yes, there's plenty of shiny objects and HR tech start-ups, but most of our large clients are looking for an integrator. They're consolidating. They're looking for less vendors. And I think BTS is very well positioned to play that role. We have been innovating with companies for 40 years, how they learn, how they drive change, how they improve performance, and now it feels like the beginning of the next era.

Of course, the AI productivity gains that we did in 2025 are going to have a material impact on 2026. So just to remind you, the total severance that was paid in 2025 was SEK 8 million in Q2 and Q3 and another SEK 10 million in December. Resulting in 2026, $5 million reduction in costs from our May AI breakthroughs and $2.6 million reduction in operating costs based on our Phase II AI breakthroughs, and we expect more to come. I would say a realistic conservative estimate in 2026 is probably about USD 1 million, SEK 10 million. And best feel on that right now is the majority of that would start to hit in the third quarter. So given all of this, we believe that our results will be better than 2025. This would be consistent with how BTS historically starts the year. Thank you very much.

Excellent. Thank you very much, Jessica. I have a couple of questions, but just to let everybody know that if you have questions, feel free to write them in the chat and the Q&A field, and I will ask them to Jessica. But I start off with one in North America in Q1. You are extremely clear on recovering to growth in Q1 and also see profit going up in the first quarter versus last year. Is that driven by what you have seen in January, February or what you expect to see in March kind of...

Both.

Both. Okay. So it has started off well and you expect to see it continue throughout Q1. It's not only that you started off slower in January, but you see that we're going to do a lot in March, and that's going to save the day.

No. we're not hoping for a hockey stick in March.

Yes. I see. That's very clear. And on the guidance in 2026, would you consider the EBITDA guidance to be driven mainly by sales growth or lower costs if you have to divide them? It's obviously both. But which is the biggest one.

You can imagine how good it's going to be with good growth, right? So -- but it's -- I would say it is 50-50. We expect double-digit revenue growth in Europe and other markets to continue. And we expect North America, at least in the first half to have moderate organic growth. And because we did so much cost savings, that's kind of the cherry on top, right? So...

I see. And on AI, you share very interesting proofs here with numbers, et cetera. While we can all see the reality that the global stock markets are extremely fared about AI for global management consulting firms, software firms, everything. And all the companies I talk to at least, they haven't really seen anything on the threat downside, but they see all the favors they can do internally. So where do you think the reality is on what you see? Do you see that your customers have a lower demand because of AI recently? Or do you only see that you can favor from it? Because there's a big discrepancy.

I mean, obviously, there's things that are in favor for BTS, and there are things that are posing challenges for us. Some interesting proof points, and I didn't mention this yet in the presentations, but an additional advantage for BTS is a new client base opportunities. So if you think of the AI hypergrowth companies to go after as clients, our West Coast office, in particular, is doing a great job of that. In fact, I can tell you that Anthropic has chosen us as their go-to-market enablement partner. That's the company behind Claude, for example. And they're using us both for our approach to driving change and enablement, but also using our technology as kind of an evidence point that there's also a new customer base, which is very exciting for our team.

If I think about how the clients are reacting to the moment, I would say they shifted quite a lot over the course of the year. They started the year being very apprehensive, very slow to adopt AI. Many of the buyers saying we can't have it yet in our function and IT is on lockdown and they're only giving everybody one tool. By the end of the year, we saw much more of a stronger appetite to experiment, right? In terms of how can we do leadership development differently? How can we drive scale change? What should we do for our sellers? And BTS do have ideas on how to do things differently. I think they're still slow in general, but I think the appetite is changing. Yes, maybe I'll let you ask follow-up questions because there's probably a lot to...

No, that's fair. We'll take one from the chat here from Oscar Ronnkvist from SEB. You say significantly improved EBITDA already in Q1. Can you specify what it means in terms of EBITDA year-over-year when it's up significantly and not only quarter-over-quarter in absolute terms?

I mean we're basically doing what we've historically done, right, which is we start the year if we see it, look better than as a forecast, and then we learn more as the months progress. But North America, in particular, because of the cost savings that we did in 2025, plus the return to moderate organic growth in the first quarter is what gives us the confidence. And for us, significantly better is 15% or higher.

Okay. That's clear. The second question from Johan Sunden. It's related to this as well. How good visibility do you have for EBITDA outcome in North America in Q1 '26? It's probably similar to my question already. But the follow-up is how is license revenue expected to develop quarter-over-quarter and also year-over-year in North America in Q1?

We have good visibility. We're halfway into the quarter right now in terms of cost and revenue. In terms of license development quarter-over-quarter in North America, it's a mixed story on license. It's like old school and new school, right? So on the old school stuff, fortunately, for us, only about 2% of the company's total revenue is related to content license, and I kind of think that market is dead, right? And so we don't have that much more license for our clients to cancel from us on the content side.

And at the same time, growth in our Verity product from the Wonderway acquisition and those AI technologies that I shared with you are progressing very well. So there will be a turning point sometime in 2026, where the license of the new products helps our overall license picture grow, right? My best gut feel is that will probably happen by the third quarter, but it's -- it will be a mixed bag until then. You don't anticipate any major decline in license, let me just to be clear. So it's more iterations here or there client by client.

Yes, because licenses were down in Q3 and Q4 year-over-year.

Yes, yes.

Okay. So not much more from this level down. Johan Sunden also had a follow-up on the EBITDA margins in North America, how they are expected to develop year-over-year in Q1. You already answered that by saying profits up more than 15%. I don't know if you would like to add anything on margins, but...

Not really, but it will be significantly better.

Yes. No, true. We have another one on capital allocation. With a record low valuation, trading at 7x the EBITDA you actually did in 2025 and you expect growth in 2026. Why does the Board not consider buybacks as an alternative to drive extra growth?

Yes, yes, we've been talking about that.

Okay. And what was the conclusion?

We have not concluded yet. It's been discussed.

Okay. Discussed not concluded yet. I see. And then we have a question from Jonathan [indiscernible]. Could you please help one understand dynamics in the license sales as a percentage of revenue? It has historically been around 10% of sales, but it is now 7% and total sales are down. So that's down even more.

This is specifically unique to the North American market. And in the fourth quarter, there was one deal that we had done in the last 3 years with one more traditional software company, not an AI growth company. And they did not renew that in the fourth quarter. Instead, they said, we're not going to work this way with you because it was a new buyer, new budgets, but you're going to continue to be our partner this year. So we couldn't take that revenue in the fourth quarter like we had year-over-year. That's the real reason behind the decline in the fourth quarter.

Do you think licenses will be back to 10% of sales over time?

They do.

Yes, over time, in detail?

Yes, because we have a whole bunch of new technology now that's unique and in demand and supportive of the value proposition. So...

Excellent. We have another one from Oscar Ronnkvist at SEB. Can you add some color on the magnitude or quantify the positive orders in North America? I guess it is up year-over-year.

Sure. I mean I think, I think the data point I can share with everybody here is that the bookings in North America in the fourth quarter was around 25% or 26% higher than the fourth quarter the year before. It was actually over 40%, but then when I took out the decline from that one renewal, we brought it down to 26%, 27%. That's probably the best data point I can give you in terms of increased demand coming into the -- into 2026.

Perfect. We'll see. I think we have a couple of more here. License revenue, again, they are still under pressure. How important are these for your margins going forward?

This is going to sound silly, but not that important in the short term. And with, if the AI tech can take off in terms of the portfolio of the new products, it will be significant upside.

Okay. Clear. And can you elaborate a bit on how your license revenue works? Are there -- are these onetime fees for perpetual licenses? Or are those recurring?

Thank you for the clarification. The license -- the old school license, which is the majority of our license, do not have a renewal date on them typically. Maybe that's 5% of them did that, right? Most of them were initiative based, and it was clients saying, okay, we want you to build a custom simulation for us, but we want to bring it in-house and deliver it and do the rollout, and we'll pay you license for the use of that simulation as a onetime event. And typically, they use it then for somewhere between 3 to 12 months and then it's over. The new tech offering has renewal dates, and it's just a different -- slightly different, more sticky service.

Okay. That's clear. How should we think about employee growth in 2026? You are still a consulting firm, have been driven by a number of employees historically, maybe less so in the future, but how do you think?

Yes. So there's 2 categories of employees. There's our billable consultants who generate revenues for us and then there's the operational staff, right? And the operational staff about a year ago was 41% of our total employee base, and we could see we are going to have quite improvements in that total percentage. So I expect the number of operational staff to continue to decline, and we are expecting to increase the number of our billable consultants and revenue generators in all 3 markets this year.

Okay. So net-net, you feel rightsized if we exclude future M&A, obviously, but on an organic basis?

In terms of total headcount delta, the interesting...

In '26.

Yes. Obviously, the billable consultants are more expensive than the operational ones. We have plenty and low market as well. It's probably going to be about flat, to be honest.

Cool. Fair enough. And we have another question from Jon Hyltner. You say that you expect growth in Q1 '26. That refers to year-over-year growth, I assume, you said. And is that both for the group and for North America?

Correct. That's quarter compared to Q1 the year before, and that would be both for North America and for the group.

For the group. Excellent. That's clear. We have another one here. Could you elaborate a bit on how your unit economics have changed after this new AI revolution in BTS?

Not that much yet. So if you look at the average pricing across our services, we have had very little change, both in the fees we're charging to build and customize and co-create and the fees that we're using to deploy. That said, given the new simulation platforms, it is faster for us to do the customization and the co-creation process, right? So I think that our speed will yield smaller upfront fees in some cases, which will allow us to deploy faster.

And for us, the revenue is in the deployment. So that's the profitable part of the business, and our clients usually want to move quickly. So I think overall, it will be beneficial to us to get to deploy faster than to quickly customize or co-create. That will be the biggest change. And then with the AI technology with much higher margins on that offering, that would obviously be the other one.

I see. I also have a question on the full year guidance on '26 that EBITDA will be better than last year. If we look at the nonrecurring items in 2025, only -- if we assume 0 in '26 as a base case, that will drive 10% EBITDA growth.

Correct.

On a flat underlying performance, and you already guide for growth in Q1 and for lower costs full year '26.

Yes.

Doesn't it sound like a significantly better EBITDA guidance rather than a better EBITDA guidance?

Sure does. And we always start the year this way.

I know. Excellent. I will see if we have any final questions in the chat. No, we don't. And I had the opportunity to have mine, and we got all the questions from the chat as well. So -- thank you very much. If you would like to have any final words, otherwise, I think this Q4 presentation is finalized with BTS.

Super. Thank you.

Thank you very much.

Okay. Good morning all, and good evening, Jessica. It's Daniel Thorsson here from ABG, who will host this morning's conference call with BTS and the CEO, Jessica Skon. So very much welcome for all joining. Analysts have joined through a separate link, so you should be able to ask questions verbally in the Q&A session. I will open up for that in the end. But just saying welcome to Jessica, and feel free to go ahead and present the Q3 report. Thank you very much.

Super. Thank you very much, Daniel. Hello, BTS investors. Welcome to the Q3 report from BTS. We're not happy with the quarter. It was a tough quarter. At the group level, we grew 3%, but we had a profit decline of negative 16% if you adjust for foreign currency exchanges and negative 25% if you include the currency effect. So let's walk you through and kind of demystify what's behind the profit drop in the third quarter. There's really 2 big reasons. Number one is something I'm going to tell you about in North America and number two is negative currency effect.

So North America, you can see the decline of SEK 10.3 million in the third quarter. One big reason for this, 65% behind North America's drop has to do with one particular customer engagement sold through our APG channel of a more traditional BTS product. And the reason why this was particularly painful is because it's kind of a pure license play, which means the value drops, the vast majority drops to the bottom line compared to our other services.

And when you compare this license revenue through the APG channel in this quarter compared to a year ago, it had a significant impact on the profit. If you look at the impact of the weak dollar, it's about 28% behind North America's profit drop. If we look at BTS Other markets, it's really 2 things. One is we decided to increase our marketing investments. So we had a lot of client events and dinners and roundtables in the third quarter compared to a year ago. And then, of course, it's also the adverse currency impacts, which makes up 50% of the decline in BTS Other markets profit. And BTS Europe had a plus. They performed well. They increased their profit in the third quarter. They continue to do well. Still a tough market in Europe, but they've been performing quite strongly, and we do see some slowed growth happening or happening right now in the fourth quarter.

So bottom line is the poor results and profit in the third quarter despite a 3% growth is because of the negative effect in currency and also the one client deal through the APG channel, but because it's a high license deal compared to a year ago, had a disproportionate impact on the profit. If we go to North America, our biggest market, which to remind you, we are in turnaround mode. We're 1 quarter in. We've changed the leadership team and put a lot of efforts into turning this market around.

We see the turnaround still as on track. And on track for us means we shared with you last time that we expected to get back to growth in the first half of 2026. A couple of highlights to talk about BTS North America, that Phase 1 of our AI efficiency has been moved into full effect. The benefits of this in the third quarter is the underlying cost for BTS North America have been reduced by 2% and our revenue employee is up by 10% in the core business. We have also added more sellers into the third quarter. We have much higher win rates. I'm very proud of this. Just to give you a sense, at the lowest point in North America this year towards the end of the first quarter, our win rates were mid- to high 20%, which is pretty unacceptable. We are back up to our sweet spot of 61% win rates across all deals in the third quarter and 71% win rates across deals over SEK 500,000.

We've also won some really new great strategic clients, both some of the new tech hypergrowth companies as well as in other industries. If you look at the profit performance of what I'd call [NAMS] organic profit outside of the APG channel and the profit that's sold through the channel, the profit was stable in the third quarter, even though the revenue was soft. So we're feeling good about that.

Our Executive Coaching business continues to grow. It's very successful. That was from the Boda acquisition a couple of years ago. And then Sounding Board, the scaled coaching acquisition from the first quarter turned to profit in the third quarter as well. They're performing on plan. The integration is going well, and we continue to win very big end-to-end global coaching deals, which was the whole idea behind the acquisition. So yes, I mean, bottom line in BTS North America, we're still in the turnaround. No quick hit win 1 quarter in. Historically, when we have to turn around parts of the business, it typically takes 3 quarters. And right now, we feel like everything we're seeing in terms of top of the funnel activities and win rates and presence in the market, we believe that we'll be back to growth in the first half of 2026.

BTS Europe continued to grow in the third quarter after a super strong start to the year, and they have a healthy margin. The demand is gradually slowing down to more kind of typical rates that you would see from a BTS business. And in the fourth quarter, we do think that the revenue is actually going to soften a bit. That said, they have a really strong pipeline. Their win rates are super competitive and high.

Their activities were, I think, up 60% in the third quarter compared to Q3 a year ago. And so we feel pretty strong about Europe's 2026 start to the year. APG, which is the channel in BTS North America, which is getting a lot of attention in this quarter report. They continue to decline, slow market for them, reduced project scopes and the cancellation of licenses across some of their client base.

As I mentioned to you, when BTS can sell our standard products through that channel, and typically, that's like a standard simulation that the clients will facilitate themselves, that's pure profit for BTS North America's business. And one of the things we've done, just given APG's decline over the last quarters plus the pain that we felt in the third quarter, we took some fast action. I shifted the APG's reporting structure to me since I'm in the North America market, and I can drive faster synergies and energy there again.

And then we've bolstered the plan and how we're going to support APG through 2 of our major practice areas. If we look at BTS Other markets, we had I would say, more kind of macroeconomic impacts, specifically in Southeast Asia and specifically in Thailand, which contributed to slower growth than we were expecting in the third quarter, and we continue to see it being soft in the fourth quarter as well.

Balancing to that though, however, in the third quarter and in the fourth quarter is strength in the Middle East business. We also expect the fourth quarter to be strong in our Spain business, Latin America and so forth. And as we mentioned, BTS Other markets did a lot of client events and dinners. They were very successful, very well received.

They generated a lot of leads, and those will start to pay off in the first quarter. From an AI perspective, I'm really proud of this. Our AI services are continuing to grow at kind of hyper speed. Our bookings of AI-related adoption services have now reached 10.3 million year-to-date, which is up [482%] from the same period last year. Our Verity platform, which is part of the Wonderway acquisition a couple of years ago, bookings has now reached $4 million, which is 15x bigger than the same period last year and 33% growth from the second quarter.

We are having a lot of fun right now in terms of meeting with clients and partnering with them, specifically on what we call bottoms-up kind of Grassroots AI innovation. So what we're seeing is a lot of companies are placing their kind of typical ways of looking at digital transformation, top-down AI bets, but we believe there's a lot of value to be unlocked bottoms up, and that value proposition is resonating very well in the third quarter.

Specifically, we've also had some -- we had a really big breakthrough in the third quarter, which is going to have implications on our talent and organizational model moving forward. I mentioned to you in the last couple of quarters that our global simulation team had been experimenting with different AI tools. And we started to go live with our clients in the third quarter. That continued to rapidly expand around the world. And just actually in the last couple of weeks, we kind of hit the -- I don't know if it's the final breakthrough, but it's a big breakthrough across our most complex simulation platform.

So we have officially completely redesigned or retrofitted how we build simulations across our practices. And this has strategic implications for how many people we have in our operations teams, how many people we're going to put on the client project teams, the economics for our clients. I announced this breakthrough to 90 of our existing [Technical Difficulty]in BTS North America, and they were absolutely thrilled to hear about the values for them.

And so we're now moving from, I would call it, breakthrough AI value experimentation and innovation to scaling this new way of working globally. And we will start to see material P&L gains already in the first quarter. From an automation update, part of the reason why we made the Sounding Board acquisition in the first quarter was they have great tech platform, which would allow us to scale. So our movement of existing workloads over to their platform is on track.

And we are continuing to do that through the first quarter. So additional savings in OpEx will be coming beginning in the second quarter of 2026. So for those of you who have been with us for a long time, you're very used to seeing the slide that we are used to average growth of 12% CAGR since 2001 and an average profit growth of 15% per year. It has been a tough year, specifically for one reason, that's BTS North America's core business, which is why we did the leadership change in early June, and that turnaround is on plan and progressing well.

It's going to get a little tougher before we get back to the growth, but the plan is in the first half of the year, it's looking good. So given although we see clear signs of the operational improvements, and we have strong markets in Europe and most of the world, we do foresee revenue decline in BTS North America in the fourth quarter. So that fourth quarter dip, combined with continued currency headwinds is the 2 major reasons behind why we are lowering our outlook to be significantly worse than what we said previously. And with that, I'm sure there's clarifying questions and comments. So I'm all yours.

Excellent. Wonderful, Jessica. I have a couple of questions in the beginning here, but I also tell the other analysts who have joined, just raise your hand, and I'll let you ask questions to Jessica as well, of course. First, a question on Europe here, somewhat softer demand into Q4 despite the strong year so far. Is there any particular market or sector behind the slowing trend in the fall or more the customer pipeline you are sitting on?

There's not a particular sector behind it, and it's not a particular office. Our London team's pipeline is a little bit softer than the others. But no, it's more that they had a really strong first half. And when we look at their full year performance, it's still going to be really good with great margins and growth and all of that. And to also kind of balance the softening in the fourth quarter, we do not believe that, that's going to carry over into 2026.

The pipeline and the deals and the work that we have line of sight on already in the first quarter shows strong growth. So it's more like a softer end to a really big year for Europe.

Okay. That's clear. And then on the U.S. market, some positive words on the U.S. tech sector here in the report. We can all follow the huge AI investments, of course. Is this what partly drives demand for you as well that the tech sector in general is more willing to do investments? Or are there any other drivers behind this comment?

No, it's a mixed [bag] with tech. We can already start to see kind of the new hyperscalers compared to the older tech who are still trying to compete for the growth rates that they've been used to. So in some cases, for example, we have one of our larger software clients who has just gone through a major reorg. And with that, we expect their spend with us in the fourth quarter to be down quite a lot. At the same time, we've just brought in new software tech clients that are more on the hyperscale side, and we expect that to ramp really quickly. So it's a mixed bag.

I see. I see. In general, in the market, do you see any noticeable price pressure or price competition in some markets for like general management consulting services today?

Not really. I mean not so significantly. There is less interest in paying for content license which for us has never been a very big part of our business, but it's something that is affecting the training industry as a whole and any competitors who mainly have a content-first play. Our pricing compared to traditional consulting firms, especially on the AI implementation side is very affordable.

So we are not seeing any pricing pressure there. We are not seeing pricing pressure on our new AI platforms and technology. One of the breakthroughs with all of the simulation redesign work we've been doing is we'll be able to build simulations faster. And so I do think we're going to see a shift in our client revenue perhaps less upfront because we can do it more quickly, but faster to deploy, right? And with the faster deploy, we will see the license and usage fees hitting quicker than normal.

Yes, I see. That's clear. And then a clarifying question here on the guidance for 2025. You also include that revenue will decline as well as EBITDA. Is it also significantly worse on revenue? Or how should we think about that addition?

So no, we made a mistake and then we've already fixed it, and we'll be sending it. We were only relating to the earnings. It was a miss type. So top line for the full year, we still expect actually growth at the group level, just low single-digits growth. And yes, that was our mistake. So I'm sorry about that.

No problem. That's very clear. Let's see if any of the other analysts would like to ask a question, we'll see how the format works here if they can raise their hand or just unmute. Let's see if Oscar or Johan, for example. Otherwise, we have a few from the chat. I'll take one for the chat, just try to shout out any of the other analysts. They seem to be joined correctly here at least.

But we have a couple of questions from the chat Jessica. And then the first one on license sales. Can you elaborate on the dynamics within license sales? Is it related to smaller deal size or fewer deals in total as well? Do you think that you are losing some deals to competitors and why? And you also say that the lower license sales in Q3 was only temporary. Can you elaborate on that?

Yes. The particular license deal that was extra painful to us that was sold through the channel, that was really just to one customer, and it was for one of our standard training simulations [Audio Gap] before is still relevant in terms of clients not wanting to pay content license. So if we have any old content license deals out there, we don't have much, but those would be at risk. Now the growth of the Verity platform, the BTS simulation usage, some of our other AI platform offerings, that growth, that subscription growth will outweigh any decline in content license or product license revenue. But in Q3, it was just that one simple product through one customer.

I see. That's clear. On one-offs, are there any one-offs in this quarter in Q3? And yes, what was the underlying EBITDA in that case? I think that you had like SEK 5 million in Q1 and SEK 14 million in Q2, if I remind correctly here, anything in Q3?

Probably just a tiny little bit of extra severance, but not much.

No, exactly. You don't state anything in the report. And on the cost savings program, what's the status of this cost savings program? How much of the cost savings were realized in Q3?

Nearly all of them. Yes. So we'll get 100% live on them in Q4, but the majority were realized in North America in the third quarter. What's interesting is what we're going to do for this next phase now that we've had the final breakthrough in using new technology across all of our simulations. And we are very busy right now working through those implications.

So -- but it really -- we just hit the next level of breakthrough just a week ago, and the teams are moving fast. But this will have implications across consultant teams, our digital enablement teams, operations, project managers. So I can't -- I don't have enough clarity right now to share with all of you what to expect, but we are working on it very quickly.

I see. A linked question to that, in terms of number of employees going into 2026, do you expect this number to grow in '26? Or should we see top line growth coming from increased sales per employee rather?

Yes. We will bring in a few people here or there, probably revenue generators, but the total number of BTS employees will shrink in 2026. So we will have revenue per employee improvement, not just from what we've already done this year, but from a second wave as well.

Okay. That's clear. And then also a question here. In Q4 '24, you mentioned that 2 large clients canceled their annual events, which affected revenues by negatively $2 million. Are those clients back with their annual events in Q4 '25 now?

No. They're not back. And one of them is also most likely going to be behind another major drop in the fourth quarter. So we're working on it right now. But yes, yes, that's -- one of them is why North America is going to have a tough time in the fourth quarter. That said, I can give a little more context. That's one of the tech companies that's gone through a major reorg, and have really changed their budgeting approaches, and they're not doing another big event in the first quarter this year.

The number of large company sales kickoffs and events that we are doing, however, is up across North America, but the average revenue spend is down. So the team is really busy. The deal sizes are slightly smaller than they were last year. And that's -- I think that's just a reflection of clients want to do something still, but they're spending less.

I see. A couple of written questions here from Johan Sunden. When during Q3 did the important licensing deal in North America fell away? And what is the risk that more important clients do the same going forward?

Yes. The third quarter, we found out about it in the last few weeks of the third quarter. We don't have that many other product license deals like that in the system. We have -- we don't have risk of that happening again in the fourth quarter. So I mean, yes, it's not something that's so frequent across our revenue base.

And it's also the delta from Q3 last year with APG that made it particularly painful. Yes. So I don't see it as a particularly acute problem compared to the other things we're trying to do to get back to growth.

I see. I see. And then a second question from Johan here. How was sales and marketing costs in Q3 isolated to the other markets business? I guess the question is how large share of sales and marketing are related to other markets roughly?

From a total sales and marketing spend?

I guess so.

Maybe I can clarify. More like how isolated the step-up in sales and marketing cost is for Q3 and if there will be a similar kind of step-up in Q4 and...

Yes, yes. No, isolated to Q3.

Perfect. But you said that there was some [dealers] now in Q4 as well, right?

The Q3 is where most of the world did their increase in marketing events. I've been busy in North America in Q4 doing the dinners, but the expenses in most of the world that we're referring to was in the third quarter.

Yes. Perfect. Yes, my final question is more like the AI breakthrough that you highlighted just during the presentation. Just curious to hear your some initial thoughts on kind of impact on unit economics. How has kind of feedback been from clients? Any worries that there will be fee pressures? And just curious to understand how the value created will be distributed.

I'll share with you exactly as I can see it at this moment. And it's wild how fast things are changing. And you all know this and you hear it probably from all your clients. But I just to give you a sense, like, I've been waiting for the team to figure out if we can do this across our biggest [SIMs]. And I got a phone call last week saying that Microsoft just released some new feature. And that feature is kind of the final missing piece, but no one could have dreamed that, that feature would have come out a week ago, right? It's just kind of the world we're living in right now. Client feedback is coming in 3 different ways. One is we're able to demo in our sales meetings a real [SIM], what we mean, a simulation of their business.

And that demo is blowing their minds. Like they cannot believe that we're able to kind of visualize what they're expressing in their strategy in such a quick way. So it is helping us move deals forward faster and have really high win rates. So that's a good sign. Fee pressure has not hit us yet, and we are working through our -- updating our pricing guidelines around use cases because what I shared with 90 of our customers and many of them who have known us well, we're nodding the whole time.

Yes, we can build these a lot faster and still have high fidelity. But for some instances, they'll choose not to do it faster because sometimes we get paid just to have the working sessions with their executive teams and align everybody through the process of modeling and simulating. Other times, the whole point is to get a simulation on as fast as possible. So when speed is of the essence, yes, the upfront build will be reduced. if it's a small simulation, just -- I mean, it might be reduced from SEK 100,000 to SEK 50,000 or something like that to build it. But the benefit for us is that we'll go straight into licensing. And usually, what clients have always wanted to do is get more usage out of it as opposed to have some of their budget going towards the upfront build.

So we will reduce some of the upfront fees, but I don't -- it hasn't happened yet, and we'll see kind of deal-by-deal, but how we shift that. On the other hand, getting the subscription and the usage and prioritizing that over the customization, I think, is better economics for the firm and allows us to deliver more value faster. Look, from an internal perspective, there's 2 major changes.

Before this, when we would build the simulations, we would basically first model it in excel with some other software, and then we would move it back and forth between the Mumbai team and they would build a different version of it or an updated skin or something would go back and forth. That whole step is gone. So now the team is just coding or vibe coding and do stuff right in front of the client together with the client.

There is no need to go back and forth with other teams. We'll go from 7-person team to 2-person teams in terms of the design. So it's a pretty big implication.

Good. We have a few written questions from Oscar Ronnkvist, SEB as well. First one, did any of the pushed out revenues in Q2 become realized in Q3 in North America?

It's interesting, yes. And the win rates are growing, and we're celebrating all of those as well. So it hasn't been a -- Q3 in North America did not feel like, oh, thank goodness, all that stuff materialized from Q2. It's been a balanced feeling of the work that got pushed plus the new client and logos that have been coming in. So I don't have the exact percentage of revenue in the third quarter that was from the push. I can get back to you if you'd like.

Fair enough. The other question, I think it's related to Johan's question first on increased investments in other markets in the quarter and how temporary they are. But Oscar's question here is, can we assume an increased margin ahead in other markets because of lower investments?

Yes. Yes. Yes, you should in the fourth quarter, both better margins and revenue growth.

Yes. Okay. Fair. And then we have another question from the chat as well. License sales were down last year in Q4, 33% year-over-year. So you should meet quite low comps this year in Q4. Do you think license sales will be lower year-over-year again here in Q4? Or could they recover a bit?

There's one deal that we've been doing every year in the fourth quarter that I do not think we are going to do again. And that deal is about $3 million in revenue. And it's not that we're losing the client. It's just that they cannot make the economics work right now given the cost pressures that they're under. So we're going to evolve from that way of working with them to scoping each individual project now for time and materials and subscription and all of that individually.

So yes, if you think about that, even though that's a different partnering model, if you think of that as license, you're going to see one more drop in the fourth quarter from that particular client.

Okay. That's very clear. I'm trying to scroll through the chat here. I don't think there are any further questions actually, and we got questions from all analysts, I could see join the call and some of the audience. So thank you very much, Jessica, for the presentation, and have a good night sleep, and we will talk later today, Swedish time and tomorrow for you.

Super. Thank you.

Thank you very much all for joining.

Bye-bye.

Good morning, and welcome to BTS Group Q2 Report 2025. [Operator Instructions]

With no further ado, I hand the conference over to CEO, Jessica Skon.

Perfect. Thank you. Hello, dear investors. Thank you for joining. And for those of you I'll see later today, I'm looking forward to the time with you. Let's talk about Q2 2025. No doubt, it was absolutely defined by a big problem, right? EBITA dropped 23% in the second quarter. And if you unpack that, you will see that, that is due to one issue, that is the operations of BTS North America.

And within BTS North America's profit performance, we lost about SEK 36.3 million in the second quarter. Half of that was due to onetime expenses of severance and legal fees associated with the Sounding Board acquisition and also part of the dropping unfavorable U.S. dollar exchange rate. The other drop was 100% because of the decline in revenue in North America.

So what's been done? In early June, actually, we did a reorg. We have a new management team in place in BTS North America. I've gained 6 new direct reports as a result of that and about our top 30 partners in the company have switched to their reporting too. We'll talk more about that in just a minute. But Q2 was also defined by something else. We set out this year to get back to double-digit growth, and I'm very proud to say that 2 out of our 3 units are successfully back to double-digit growth, BTS Europe and BTS Other markets.

Let's go through each one of the markets now in more depth. So BTS North America had negative 4% revenue growth in the second quarter, and our new growth strategy has been fully implemented. Our view on the main reason for the negative 4% growth is inefficient sales operations. It is true that Trump had an impact on tariffs from early April in the second quarter. It is true that some of our customers went into delays, conservatism. They froze one of our largest company clients, stopped all work, did a 17% reduction in force, and that obviously hurt the team.

When we looked back at the second quarter, approximately 12% of the quarter's revenues were pushed out. Over half of that was in the last 7 weeks of the quarter. So that is true. On the other hand, it's been 3 years of unexpected Black Swan events, and we think the team can do better. And our success in most of the world in Europe show us that it's an internal issue.

So we implemented the new team. The new growth strategy is completely implemented. It's starting to go through the company, and I have to tell you there is a lot of energy. We have more full-time sellers in the market. We have more time spent with our customers. We've slowed down anything that's not customer or stopped noncustomer-facing time. We're prioritizing our core clients, the clients that spend the majority with BTS and where we have the highest win rates.

We are putting our AI offering in every single proposal, not 10%, not 20%, not 30%. 100% of our proposals right now have our AI technology and our AI services embedded. And we expect to return to growth in the first half of 2026 as we implement these changes as they gain traction and momentum and as we see our win rates coming back to the clip that we're used to.

If we jump to BTS Europe, which was a very tough market in the first half of the year, we're super proud of our 31% revenue growth in the second quarter in BTS Europe. I'll remind you all what's behind this. For big competitive global deals coming out of Europe, the team has over a 60% win rate, which is double that of the rest of the company. And so despite the fact that the market remains sluggish, the second quarter was fantastic for them.

We did start to see, towards the end of the second quarter were more sluggish and delays in some of their decision-making, but an absolutely fantastic quarter for Team Europe. We still managed to win large contracts. And of course, similar to [ NAM ] and across the whole company, we continue to push on early pipeline generation and strengthening our revenue growth culture.

BTS Other markets, second quarter back to double-digit growth at 19%. Demand has been strong in most of our regions across Other markets. Southern Europe, which is part of other markets, has started to recover slowly, which is good news. More financial services from an industry perspective, we've had a lot of win rates in that sector in the second quarter.

And the investments in the Middle East and our African operations have been paying off in terms of delivering high growth. So besides looking at BTS Europe and BTS Other markets to show us that double-digit growth in a more difficult market is possible, we can also look at our services. And the executive coaching shows us that double-digit EBITDA growth is also possible.

So our coaching business' profit grew 34% in the second quarter. Their win rates are extraordinarily high. They're experiencing the highest renewal rates in their 12-year history. And the combination of the value proposition for the CEO and the executive team, combined with the new technology we acquired from Sounding Board is a winning value proposition. In fact, we purchased Sounding Board in March, and it's off to a very strong start.

So in terms of statistics from that, the team has won 11 new clients in all 3 of our geographical markets since the end of March. Three of their accounts have expanded. I want to call out one particular competitive win because this maps to the vision of why we acquired Sounding Board. We wanted to be chosen as the global coaching provider of choice. So you could coach all leaders from the CEO to the front line. And our clients can also use the technology platform for their own internal coaching and mentoring needs.

So we won a very large biotech Nordic company that's in 70 countries, and we just won as coaching provider of choice. So we're very proud of that. If you look at just a snapshot of the units, you can see here what I've already been saying in terms of the growth and the EBITDA performance, but bottom line is strong organic growth in 2 out of the 3 markets.

BTS Europe's margin has a particularly nice bump from 11.3% to 14.4%. Business mix was favorable. They were able to execute it with less external contractors, hence, the margin and BTS Other markets, we saw the demand picking up in most of the markets. APG, which is a very small unit in BTS North America, they act as a reseller of some of our products, not all of them, really was hit by the overall kind of malaise in the U.S. market in the second quarter. So their customers reduced project scopes. They try to do things in-house and/or they delay.

Let's talk about AI in terms of keeping BTS competitive in the market and our AI services, and then we'll look at our gains in terms of productivity and productivity going forward. So I think this is an enormous opportunity for us, and I am deeply energized by our advancements, by the success of the Wonderway acquisition in the first 12 months, the creativity and the tinkering that I'm seeing across 24 countries and the win rates as a result of embedding AI in all of our proposals. And I'll just like take a step back for a second. From a market opportunity, I think it's huge.

There's always going to be consulting firms that are going to implement big company tech. That's not BTS, right? There's going to be other firms that are going to recommend a change in business model. We are the only firm who's going to reflect their new strategy, their AI strategy, right? The new talent model in an organization that's happening because of the use of the new AI tools.

We can reflect the new ways of working, and we can make it deeply personal, which is the core value proposition of BTS for the last 40 years. We have clients asking us now to be their -- what they said is their Accenture in terms of implementing their own look at how to create AI-based tools and simulations and drive adoption across the organization. So it's a very exciting time for us. To meet that market demand, we're doing a few things. First of all, in the first bullet here, you'll see the revenue associated with our AI-related adoption services.

So training on the AI tools, next step maturity, getting adoption by business unit or function team after team. So our revenue growth here has grown 425% versus the same period last year. We have $8 million in bookings. It's absolutely just the beginning. We are also launching 3 new core services to help our clients further adopt and get the lift from the AI tools that they want their teams to use.

The other way to look at this is our own AI platforms and the subscription revenue that we are getting from them. In the first 12 months of this offering, we're at $3 million in bookings, which is -- and we've had 100% growth from Q1 and Q2. The really interesting thing about the Wonderway AI conversational bot is that we're sticking it in our simulations for big sales kickoffs and large offsites and simulations.

And the usage of that inside the simulation is driving scaled adoption and self-service subscription models on the platform. And the subscription offer was launched in May. So fast growth here right now, big market potential and a lot of energy internally in the firm on the tools that we have. If you think about the AI in terms of our productivity improvements, we've been doing quite a lot of things, I'm quite proud of this.

So we can look at it both from the AI impact and our other automation initiatives impact. And the bottom line here is we announced our Phase 1, which was $5 million in employee savings. which mainly hit in the second quarter in terms of the severance costs. We'll start to see the lift from that already in Q3, Q4 and obviously next year. But if overall, in the first half of the year, you'll see a 7% decline in the total number of core BTS employees. Obviously, the acquisitions have added people on top of that.

We are on track with our Phase 1, $5 million in savings. We see further AI adoption, not just within our consulting teams, but across the operational functions at a clip that we have not seen previously, which we all find very exciting. We can see in the workflows of the operational functions, the prompts and the GPTs that they're custom-building to improve the efficiency of every step along the way. And our simulation team continues to experiment on different vibe coating platforms that have very strategic potential for us in terms of how quickly, how large our teams would be in developing those and value for the clients.

In terms of automation, we have one major initiative. It's one of the reasons we bought Sounding Board is to migrate BTS' coaching clients onto their technology with their operational teams. And that is 1 quarter delay, but on track where we expect the majority of the impact to impact us in 2026 and a little bit in 2027. So Q2 was tough, and it was tough for one reason, which was North America.

Our competitiveness remains strong. The market is enormous and growing from my perspective. I'm very proud of our fast AI advancements. The team is energized, and we're starting to see the win rates and the pipeline pick up again in North America. So you have come to appreciate BTS as a story of long-term profitable growth year after year. You can expect that of us moving forward.

We're proud of our historical performance, and I'm excited about the opportunities that AI is going to have for us, both internally and externally over the next 3 to 5 years. We'll continue to have a stable and growing dividend that you've also come to expect. And of course, given the poor Q2 performance, we changed our outlook. It's been lowered. The result is expected to be worse than in 2024. And looking forward to answering your questions. Do you want to start with some written ones?

Hello, and good morning. Michael Wallin here, Head of Investor Relations. While we're waiting for calls or questions from the conference call, we'll take some sent by e-mail, and we have a few here. The first one is rather long, and it deals with the outlook for 2025.

Elaborate more on how you reason around the outlook for '25. Adjusted EBITDA for the one-off costs of SEK 14 million in first half is around SEK 158 million in the first half, only slightly lower than SEK 169 million for first half 2024. How big cost savings is coming in during the second half of this year? And U.S. is meeting more easy comps. Is it reasonable then to assume that adjusted EBITDA for 2025 can meet the same levels as in 2024? Well, we've given our outlook, but maybe we can talk a little bit about what the outlook is based around or...

I think if I'm understanding the question, they're wondering if it's going to be better than what we're saying. So saying -- the chance of it being the same as last year, even though we just believe it's going to be worse. Yes, right? I mean my job is to be as accurate as possible in the moment and not have to have swings that are unexpected on a regular basis.

Obviously, we're fighting with everything we've had to make up for the drop in the second quarter, right, and to get North America back to a healthy growth clip. I took over North America in 2016 after they had 5 years of very low single-digit growth and profit decline. And in that moment, it took me 3 quarters to turn it around and get it back to double-digit growth quarter-over-quarter for the next 3 years.

So I am confident that we will do it. What we are mentioning is we think that will be in the first half, right? And North America is a big company. And so if they can't get back to a double-digit growth clip in Q3 and Q4, yes, we have the cost savings starting to come out due to the severance in the second quarter. But our estimate right now is as accurate as it can be.

Thank you. And then that question was from Alexander, and he has a couple of more questions. The second one is related to cost savings. Is any of the cost savings of USD 5 million seen in Q2? Or will the first effects be seen in Q3?

Correct.

Yes. elaborate on how large cost savings will be in Q3 and Q4 to understand momentum in the cost savings program going forward?

Yes. So most, I would say, 70% to 80% of the 5 million in cost savings were taken out in the second quarter, and then we paid the severance against that. We have a few more coming expected in the third quarter. So you will start to see a revenue per consultant improvement in the third quarter, both in North America and in most of the world. And then it will continue in the fourth quarter. And then obviously, the first 2 quarters, all of next year, we'll be running on a full year healthier clip against that full amount, right?

So yes, I mean, it's pretty easy to do the math of what percentage would then hit in Q3 and Q4. And I would also say that most of the world had bigger hiring plans given their high growth, and they've cut those way down back in March or April. So you'll also see a nice lift in revenue per head in their market as well due to the AI productivity gains.

Thank you. And the third question from Alexander is buybacks. The management and Board view their view on a potential buyback program with current valuation, I guess.

Yes. We haven't discussed that in depth. I think we're -- we believe it's a good opportunity to invest. So -- but we haven't discussed it in depth.

Yes. And then second question is from Daniel Thorsson at ABG. There seems to be a problem with the dial-in function. So first question here, should we expect more one-off costs in North America in Q3, Q4? Or are these charges and organization changes behind?

Yes. They're 80% behind us. So there will be a little bit more, but it will be small.

Yes. And second question, the guidance on lower EBITA this year is reported EBITA one, I assume, which is affected by some SEK 20 million one-offs so far this year. Is it possible to see a more flattish adjusted EBITA versus 2024? Or do you expect EBITA adjusted for the one-offs to be lower than last year as well?

Once we take out the one-offs and the currency impact, what is core EBITDA doing? Is that the question?

I assume that's the question.

Yes, it's slightly lower than last year. And obviously, it depends on the strength of Q3 and Q4.

And then third and final question from Daniel is, thanks for sharing the AI KPIs and growth progress. looks promising. Do you see regional differences in demand or order bookings of these numbers? Is it mainly driven by the U.S. or Europe also showing good demand?

Yes. What's so cool, thank you for the question. And a lot of the AI tech subscription revenue is coming from the Wonderway acquisition, which we did 12 months ago. That acquisition is the most global integration we've ever done. Within the first 3 months, we had deals in Europe, Other markets in North America.

So if you fast forward now 12 months into the integration, North America revenue is the biggest, but Europe has just as many deals or slightly less, like, let's say, 40% of the deals are in Europe and a few in most of the world and the North America has the revenue. So it's competitive in all the markets, and it's particularly competitive integrated in with the other things that we're doing.

Yes. And then a question from Johan. Have you lost revenues to competitors in the U.S.? Or is it the slower growth rate mainly due to the not being able to convince your customers to acquire your services?

Yes. I mean, honestly, it's been the slower growth. It's customers saying we're nervous on spending. We're going to try to do something in-house or we're going to wait. And I will say that we've started to see some movement, right, in the third quarter compared to the second quarter, which feels good, but we need a lot of movement to make up for what happened in the second quarter. So that's our goal.

And yes, the win rates. Well, Europe is the one who had the 60% win rates for a percentage of the deals. The person who led that effort in Europe is now running all of our practices. And what was behind the success in Europe was that there was AI and AI innovations in every proposal. Plus there was a really good high practice discipline and the clients could see our culture more easily and so forth.

And his practices are being adopted very, very quickly in the U.S., and we've already had our first wins based on that approach, which is pumping up the team. So yes, it was more market delay than us losing to competitors.

Yes. Sorry, that was from [ Joon ]. And then we have a question from Johan. AI-related revenue seems to be roughly 8% of your total revenue in the first half. Are margins from AI-related services above group margins?

Sorry, the second half of the question?

Yes, margins from AI-related services above group margins.

That's a great question. Certainly, the subscription portion of that is. I would say the margins on the training-related AI services and the more consulting is more in line with the company average.

Good. And then a question from Adam. Okay. This is in Swedish. I'll translate it quickly here. Are your forecast for the full year based on reported results or adjusted results? Because you had some one-offs in your first quarter, but also even if we didn't say how big they were...

We're including all the one-offs as part of the total earnings. So we're not saying all the one-offs go over here and live there, and I'm just going to talk about the core EBITDA outside of that.

Yes. And then some questions from Jonny. Can you elaborate on the market in North America, especially tying that you are -- that your comment regarding some movements in July. How should we think about the outlook in second half in North America?

Yes. I mean we are -- we put in place the new team or the shifts in the team in early June. I had an off-site with those leaders on the third week in June and things have been moving, right? The new ways of working kind of week-to-week, new disciplines, preparing and practicing for wins, putting AI and all of that.

I think it's rebuilding that enough momentum and early pipeline to have double-digit growth on that size is what we're doing right now, right? We're making sure we take share and we're winning on every deal, and we just need the early funnel volume up. So the team is doing the right moves, and we're seeing the right energy and clients are reacting to the reach-outs. They want to meet now, they want to move.

We're not hearing -- I can't talk right now, things are too uneasy, right? So all of those are good signs. I expect the third quarter to be better than the second quarter, but still far away from a double-digit growth target in revenue that we're aiming for. So it should be a build, right, moving into next year.

Yes. Thank you. And he had a couple of other questions. Elaborate on your comment on North America coming back to growth in the first half '26. Are you expecting market to improve in that? Or is it more internal measures in your own hands? Can we expect organic growth already in the first quarter and an acceleration in Q2 next year?

Yes. The first quarter success depends on what we're doing right now for the next 8 weeks. It's that simple. And a large percentage of North America's Q1 revenues have to do in supporting our clients top 50 meetings, top 100 strategy kickoff meetings, sales kickoff meetings for 45,000 sellers. That's what typically builds up North America's Q1 success base.

And our clients get used to us being that type of partner for them because we put on unbelievably -- unforgettable experiences for people and gets them excited and have clarity on the strategy. So that is the push right now for us in North America. Now the interesting thing is just 2 weeks ago, one of our consultants on the West Coast called me like, Jess, 3 of my previous clients just called and asked me if we could do their sales kickoffs between October and February next year. That was not solicited. That makes us happy.

That's like some movement coming that they're ready to move. We are hearing from many clients that pulling people back together in person again. So in real life, they need it. They need it for culture strengthening, culture building, and we're putting the AI tech in the in real life experiences. So honestly, the Q1 narrative when I talk to you again about Q1 is going to be 100% correlated to that -- those amount of deals and that success. And I'll know a lot more about that in the coming 6 or 7 weeks.

Yes. I've got a message here now that telephone conference might be working now. So please try if you have any questions you want to put in by call. Meanwhile, I'll take the last question from Jonny here. Europe and Other markets seems to be a strong momentum in Q2. What is driving this, would you say? And has this momentum continued so far in the second half?

Yes. So Europe's momentum, in particular, is they've had 6 or 7 quarters of 60% win rates on large, big global competitive deals. So some of the world's biggest companies headquartered in Europe, saying we want to completely rethink how we do training, how we do leadership development, how we implement change.

And in those competitive bids, they have a 62%-win rate, which is extraordinary. Our company average is 30%. So 6 or 7 quarters of that clip and that kind of high-performance teaming and win rates is what's behind their first half comeback compared to the year before. And we just won another really, really large 7 different levels of leader development just a few weeks ago.

So we were all celebrating that as well. And what -- for Europe, if we look forward into the second half, we've had really high growth. right? So we believe that Europe will end the year with double-digit growth, and we believe the growth is going to slow a bit in the second half, but still be positive in the third quarter.

Yes. So do you want to try with the conference call if we have any...

And I can comment on BTS Other markets. The only thing different from last quarter is that Southern Europe, particularly Spain is starting to show signs of a comeback, both the Netmind acquisition company from a few years ago has done a turnaround and is doing better and the core business as well, which is great.

But Middle East continues to be strong. Singapore team continues to do well. There's a lot of energy in Brazil with the Nexo acquisition. This has been the first few months of them coming together, and each team's value proposition is really clear. So that seems to be fueling with them with energy at this moment in time.

Yes. We've got another question here. What was the win rate in North America in Q2? And what has been the company's average for North America historically?

Yes. So Q1, it dropped. Q1's win rates went down to 27%, if I remember correctly. Q2 win rates went back up to 34%, which is really good. Their deal desk. So there's the typical win rates of all the sellers in the market. And then there's something we call deal desk, which is these like giant RFPs that come in that aren't part of the new logo RFPs. Those deal desk win rates in the first quarter have dropped to 22% compared to Europe 60-something percent.

So that's why we took the partner in charge of this, and they're working with the partner in charge of this over here, and we're quickly, quickly adopting the same practices. And we can already see the deal desk win rates under these new practices coming up dramatically. So I think we have the right approach there to fix it, and that explains part of the problem.

But I will say this, let me -- there's something important. Some of those non-win rates are customers who took back the deal. So they're not all saying we lost to a competitor, but it means the deal went dead because the client canceled or decided not to move forward or something like that.

All right. No more written questions for the moment. Were there any calls on the conference?

Johan Sundén has any questions.

I think we've covered a few of those that we were discussing here, but a little bit curious to hear your thoughts about what's happening in the pharma biotech industry. There's been quite a lot of turmoil in that industry over the last few weeks with regard to tariffs and caps on drug prices. Has that had any impact on your client discussions because that's a quite important part of your North American business as of now?

I agree, it's an important part of the business. No, we have not experienced anything yet. To the contrary, I think we announced in the last quarter meeting, we won a really deal -- a really big deal with Bristol-Myers Squibb.

The coaching part of the business won is about SEK 1.9 million a year for the next 3 years. The non-coaching business side won about SEK 3.2 million a year for the next 3 years, and the buyers there are trying to talk to us about increasing scale and budget. So that's just one example. So no, I don't have any examples right now of shifts in demand for our services there, but I will keep you posted.

Excellent. And yes, the other questions we had was more related to if you can kind of bridge the kind of EBITDA development on an adjusted basis for the North American business in Q3 with regards to drops in utilization versus the kind of potential for cost savings.

Yes. Yes. For sure, some of the core salary cost savings are going to start to come out right in the Q3 and help the North America business there. There's a few more seniors there's a few more -- there'll be a little bit more severance that hits in the third quarter. So the real lift, I think we'll start to experience in terms of North America's profit is going to be in the fourth quarter.

And also, if you adjust for the severance, looking at the adjusted basis, it's still the big lift coming in Q4.

Yes.

The next question is from Jonny Jin from SEB, if he has any follow-ups on his written questions.

I had some technical issues before. So I asked my questions on the chat here, but I can have a quick one as well regarding the -- you said some deals have been hesitation among some deals and maybe pushed out. Did you mention that there were any cancellations? Or did you see them coming in H2? My line was a little bit unclear there.

No, I don't think I did. So thank you for the follow-up question. Yes, some of the deals that were pushed are hitting in the third quarter, right, which is great. And we really didn't have any that were full-out canceled. It was more like a not now, let's wait and see. Let's talk again in a couple of months. I think one of the most material things that happened is one of our largest clients in the energy sector CEO announced a hold on everybody and said we don't know who's going to stay or who's going to go. It took them 6 or 7 weeks to then clarify. I think 17% of the organization was let go.

The BTS team had, I think, 8 different active proposals in play with different buyers across the company. Of course, all of those were frozen, right? And so not only was the revenue stop, but the deal flow was also frozen. Now the interesting thing is the team spent a week there about 3 weeks ago. And many of those ideas are kind of back in the works.

Now they're not ready to close tomorrow, but they're not dead, right? And now that the dust has settled in the organization, there's more movement and there's more movement forward. So it's just an example of one of the rougher parts of the North American business in the second quarter.

Yes. Okay. And then just one final. I think you mentioned that Europe and Other markets were strong and they're seeing -- it sounds like the momentum has continued here in the second half of the year. Is this also true for Other markets? Or did you only say that for Europe?

I think just to clarify a bit, BTS Other markets, I expect the momentum to continue. BTS Europe, I expect to slow down. I mean a 33% clip is really high. So we think they're still going to grow, but it will be slower growth.

There are no more questions now from the telco. So I hand the word back to you, Jessica.

Okay, super. And we've done on our side...

Yes, no more written questions.

Great. Well, thank you, everybody. Appreciate the time and look forward to seeing some of you later today.

Thank you.